Sure enough, the country that has aspired to join the euro zone is acting like a classic euro-zone headache, with its government doing everything it can to irritate not only financial markets and the international agencies that stand ready to bail it out, but also its entire population.

The forint recently hit a fresh nadir against the euro, with the common currency buying more than 320 forint for the first time ever.

Prabha Natarajan of Dow Jones Newswires says hedge funds are punishing the forint in an effort to get Hungary to come to its senses and negotiate with the IMF:

Bets by hedge funds and speculators are sending the Hungarian forint tumbling to fresh new lows, hitting HUF321.16 after getting through HUF320 for the first time during European trading. Investors are consciously pushing the currency and risk premiums on Hungarian debt to their widest levels in a bid to get the country to negotiate with the IMF. “The markets are forcing the government to accept external help,” says Viktor Szabo of Aberdeen Asset Management. “What is surprising is that it’s happening so fast.”

As Gordon Fairclough wrote in the WSJ, Hungary insists that its economic fundamentals don’t justify the kind of beating it’s taking in the foreign-exchange and bond markets, where the government’s borrowing costs and credit-default insurance costs have soared.

But a series of troubling government actions, including a controversial central-bank law and widely derided new constitution, have helped obscure whatever positives Hungary brings to the table.

And this matters because Hungary is not exactly decoupled from the euro zone. As Zero Hedge notes, a Hungary in trouble is also trouble for Austrian banks, which have heavy exposure to Hungarian debt.

Bloomberg last month, citing the Bank for International Settlements, wrote that Austrian banks have loaned $42 billion to Hungary, as of mid-2011. That’s not a catastrophic sum by itself, but it’s one more problem the banks don’t need, given their exposures elsewhere in Europe.

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